Monday, 25 November 2013

Don't get ripped off when converting currency

I recently returned from my overseas holiday and realised that although people shop around a lot to reduce the costs for their flights and accommodation we rarely ever really shop around for a good deal on the currency that we exchange.  We normally go for safety and convenience, which are undoubtedly important, but given the amount that you are likely to spend in cash on your travels (from trinkets and souvenirs to meals, drinks and transport) it is always worth remembering that you can save a lot by shopping around for a good exchange rate

You can never change cash for anything like the actual exchange rate

I think we are all used to the idea that we are going to get screwed when we exchange cash.  Anywhere that retail punters typically go, there is a large spread between the buy and the sell rate with the actual exchange rate somewhere in the middle.  The first time it happened to me I was outraged but then I (like most people) got used to the idea of being screwed.

On my recent overseas holiday though I was once again reminded how badly you could get screwed.  I am going to call out one company which was particularly bad: Travelex.  They were offering to convert my currency at 20% less than the official exchange rate

Even by the regular standards of exchange rate rip offs - this one seemed particularly bad.  What was even worse was that this was their rate when I was looking to change a rather large amount of cash.  On top of this outrageous rate they were going to charge me a 'transaction fee'...normally this is built into the spread but Travelex believed that they could convince me that this was their charge.

Always shop around for a better may even do better next door

Obviously I wasn't going to exchange cash at this rate...I walked less than 10 meters to the ANZ branch that was right next to them at the airport and I got a rate that was only a 10% discount to the official exchange rate (with no transaction charge).  I wanted some cash for when I landed at my destination so I exchanged a bit at this (still exorbitant rate).

You can often get a better rate if you wait until you get to your destination

I'm not sure if it is only Australia which rips people off so badly when it comes to exchange rates but I always seem to get a better rate when I exchange cash at my destination rather than before I travel.  I exchanged more cash when I got to my destination airport at a
5% discount to what the actual exchange rate was.

When I went into town I was eventually changing cash at only a 2% discount to the rate.  I was getting ~20% more bang for my buck by shopping around instead of being lazy and converting everything I had at the first Travelex....20% extra spending money is no small thing so make sure you shop around!

The key is knowing beforehand what the actual exchange rate is

If I didn't know what the actual exchange rate was I would have had no idea whether the Travelex deal was good or not.  How did I know that Travelex was a rip off?  Simple - I had a free app on my smart phone which downloaded the exchange rates.  You don't need to keep this app on when you travel - you just need to have a good idea the day that you travel what the exchange rate is - it may move in that time but you always have a figure in your mind to see whether you are getting a good deal.  If you get free wi-fi on your travels you can update the exchange rates. are trying to get as close to this exchange rate as possible (keeping in mind you will never actually get it - if you are getting a very good deal you probably need to watch the cash being counted out before you to make sure you don't get scammed).

You May Also Be Interested In

No comments:

Post a Comment